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3 Asian Technology Stocks for a Fatter Wallet - Analyst Blog

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Investors usually look to Asia for growth stocks. Since most Asian markets are developing, new companies keep cropping up to serve underserved areas. Existing companies also tend to see rapid growth since they are dealing with high demand.

U.S. companies are not missing out on the opportunity. The dense population and growing middle class creates the perfect backdrop for all retail items and particularly, consumer electronics. This is what led companies like Amazon ( AMZN ) and eBay to set up shop in China, India and several other markets. Facebook ( FB ) recently took its Internet.Org initiative to India because the increasing Internet penetration in the country will open the door to increased advertising revenue.

But the main challenge for American companies is the stronger currency in which they are dealing, which makes all American goods expensive for Asian consumption. So they either transfer their cost centers to Asia and/or increase penetration to pull in much higher volumes.

Another challenge they face is with respect to markets like China, which are still highly protected by the government, ensuring that the operating and regulatory environment is more favorable for Chinese operators. This makes it harder for U.S. companies to shine.

That's why we've picked out these three Asian players that are not only seeing fast growth, but also paying out regular income to investors.

China Distance Education Holdings Ltd. ( DL )

This company offers online (and offline) education services and products including professional education courses and prep materials for accounting, healthcare, legal, and engineering and construction industries. In addition to its primary website, cdeledu.com, it operates 17 others, from where students can stream or download online lectures record course notes and collect incorrectly answered questions. It also has apps for Google's ( GOOGL ) Android and Apple's ( AAPL ) iOS devices for students accessing its services using mobile devices.

China Distance has grown its earnings 152.5% in the last five years and has beaten the Zacks Consensus Estimate in each of the last four quarters (four-quarter average beat was 72.7%). The company is expected to grow earnings 30.0% in the next 5 years. But despite these earnings trends, the stock has a low PEG at 0.72. It pays a regular dividend that yields 4.5%. The shares carry a Zacks Rank #3 (Hold).

NetEase Inc ( NTES )

NetEase is primarily a gaming company (MMORG, licensed and mobile) and it also sells gaming accessories. But it offers much more than gaming: news, information, and online entertainment content, communication services (micro-blogging, blogging, photo album, instant messaging) advertising services (banner advertising, channel sponsorships, direct e-mail, interactive media-rich sites, sponsored special events, games, contests, and other activities) and other (ecommerce related to third-party lotteries, a payment system, e-reading apps, a music social network, etc). It operates in China.

The company grew earnings 25.2% in the last five years and also beat the Zacks Consensus Estimate by an average 1.3% in the last four quarters. Netease pays a dividend that yields 2.1% and since its earnings are expected to grow 14.3% in the next 5 years, there shouldn't be an interruption in dividend. Its PEG is not as low as DL's, but still pretty decent at 1.1. The shares carry a Zacks Rank #2 (Buy).

Silicon Motion Technology Corp ( SIMO )

Silicon Motion Technology is a fabless semiconductor company of Taiwan designing and developing mobile storage and communications products such as microcontrollers for SSDs, flash memory card and USB flash drive controllers, mobile TV SoCs and handset transceivers. Direct sales personnel and distributors handle the sales to OEMs and module makers.

The company's 5-year historical earnings growth of 28.8% and expected earnings growth of 21.0% provides solid support for a dividend that yields 2.5%. Its also beaten the Zacks Consensus Estimate by an average 14.6% in the last four quarters and estimates for the upcoming March quarter are trending up. Despite these positives, the PEG looks very low and below the industry average at 0.87. The shares carry a Zacks Rank #2.

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APPLE INC (AAPL): Free Stock Analysis Report

NETEASE INC (NTES): Free Stock Analysis Report

FACEBOOK INC-A (FB): Free Stock Analysis Report

SILICON MOTION (SIMO): Free Stock Analysis Report

CHINA DISTANCE (DL): Free Stock Analysis Report

GOOGLE INC-CL A (GOOGL): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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